Health care savings without Medicare cuts

As President Barack Obama and congressional leaders continue discussions to avert the so-called fiscal cliff — the mix of tax increases and spending cuts set to take effect automatically in January — we hear a troubling but familiar refrain in Washington: To fix our deficit, we must cut Medicare benefits. That is flat-out wrong.

The fact is, we have a systemwide health care cost problem in America. Health care expenditures are nearly 18 percent of our gross domestic product. The next least-efficient developed country in the world spends 12 percent of its GDP on health care. Leaders of both parties have acknowledged this dilemma. As Republican vice presidential nominee and House Budget Committee Chairman Paul Ryan has said, “If you want to be honest with the fiscal problem and the debt, it really is a health care problem.”

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This problem is not limited to Medicare. Everywhere you look, from private insurers to the Veterans Administration, health care costs are rising. (Actually, within the rising-cost health care system, Medicare and Medicaid are among the most cost-efficient providers.)

The first thing we must do is correctly identify the problem: U.S. health care system costs. The second is to solve it. Here, there is good news: We can reduce costs throughout the system, strengthen Medicare and reduce our deficit without cutting a single benefit for patients, by aggressively pursuing reforms in the way we deliver and pay for care, with a clear goal for cost savings.

The president’s Council of Economic Advisers estimated that more than $700 billion can be saved every year without compromising health outcomes; the Institute of Medicine recently put this number at $750 billion; the New England Healthcare Institute has reported that it is $850 billion annually; and the Lewin Group and former Bush Treasury Secretary Paul O’Neill have estimated the annual savings at $1 trillion.

Whatever the exact number, the potential for savings is huge. The federal government is responsible for 40 percent of America’s health care spending. If the Council of Economic Advisers’ $700 billion savings estimate is correct, we could reduce the deficit by more than $80 billion a year if we achieved only 30 percent of the potential. Over a 10-year budget period, that amounts to $800 billion in federal health care savings — all without taking away any benefits, while likely improving care.

As I chronicled in a report for the Senate Health, Education, Labor, and Pensions Committee earlier this year, the Affordable Care Act contains many of the tools we need to achieve our goals — tools like better coordinating care between primary physicians and specialists, paying for quality of care rather than quantity of care, reducing medical errors and hospital acquired infections, replacing paper health records with electronic records and more.

Readers' Comments (9)

You Democrats have already taken 711 billion dollars out of Medicare in order to fund Obamacare.

In the Congressional Budget Office letter to House Speaker John Boehner dated Jul 24, 2012 the CBO stated that $711 billion dollars were taken out of Medicare, Medicaid, and other program in order to fund Obamacare. The full letter may be found at the following web address:

http://www.cbo.gov/site...

As mentioned in the letter, “the ACA made numerous changes to payment rates”. The Liberal argument is that they will extend the life of Medicare by cutting almost three quarters of a trillion dollars in funding. A three quarter of a trillion dollar cut will most certainly extend the life of the Medicare Program. However, the severe cut in funding to Medicare Providers will result in a large number of Medicare Providers refusing to provide medical service to those seniors on Medicare. The bottom line is that the seniors, who have paid Medicare (FICA) taxes for an average of 45 years, will probably get better service going to the emergency room for routine care.

Part of the problem with Medicare is the Part D prescription plan that Bush signed into Law with NO FUNDING to support it. It's amazing how, when things were doing so well with our economy, that Bush managed to screw so many things up that have lasting results.

The Bush Tax Cuts were also given when the economy was doing well. But then we have 2 wars and a crashed economy and here we are today with this fight to end them. And a stupid war to pay for that was based on lies. And 58,000 businesses and factories closed down or moved overseas. And thousands who lost their homes. It will take decades to recover for the mistakes of 8 years.

I'm not surprised that a Democrat refuses to address the true reason that US health care costs are so high.

American doctors are forced to practice "defensive medicine," ordering tests and performing procedures whose sole purpose is to keep them from being sued. Since the ambulance chasers responsible for most of those lawsuits are Democrats, this is something that they're not too eager to mention.

As an MD I agree with the premise, but getting it done is very complicated as it involves changing the country's attitude toward the appropriate functioning of the medical system. A real solution must include a number of unpopular changes. First, tort reform is necessary. Not because payouts or malpractice premiums are disabling, but because so much care is delivered not because it is deemed to be likely to be of benefit, but because of worry that not providing it will expose providers to legal liability. Second, the culture of "I need it NOW" must decrease. People expect same day appointments and immediate care of things like twisted ankles, colds, etc which will likely resolve without any treatment. Third, we have to be willing to say that there comes a point where treatment is futile and further aggressive management is not indicated, despite what the patient or their family might want. I am not talking about withholding pain medication or comfort measures. I am talking about tracheostomies and feeding tubes for the demented. Screening colonoscopies for people whose life expectancy is less than the time it might take colon cancer to kill them. Other developed countries who spend less than we do on healthcare treat it as a finite resource to be used sparingly, and where it is likely to be of benefit. We treat it is something you ought to be able to have when you want it, and whether it is likely to be helpful is a vague secondary concern.

I applaud Mr. Whitehouse on his proposal. As a person who relies on medicare, my preference of course would be that benefits are not reduced. Nonetheless, just setting a goal of improving efficiency in the health care system is not enough. There has to be consequences if the goal is not met. I would be sympathetic to implementing a process where we establish annual metrics to measure progress. Failure to meet the metrics will then trigger mandated cuts in federal health care spending. Those cuts need not come from medicare alone. The goal is to bring overall federal health care spending as a percentage of GDP to a more sustainable level. Therefore all federal health related spending must be on the block -- Congress and the President can negotiate where the cuts make the most sense. Any thoughts on whether such an approach os feasible?